Asian countries are outpacing many European nations in the World Economic Forum’s new international ranking of trade-friendly economies.
Singapore takes the top spot in the Global Enabling Trade Report 2016, published today by the World Economic Forum and the Global Alliance for Trade Facilitation.
The report assesses the extent to which economies have institutions, policies, infrastructures and services which facilitate the free flow of goods.
While the European Union and the United States are deemed to be becoming less open for trade, the ASEAN area – which includes nations such as Singapore, Indonesia and the Philippines – is now more accessible than these traditional heavyweights.
The report attributes ASEAN’s rise as an economic power to the region’s greater integration into the global economy.
The report’s top 10 is, however, still dominated by European countries.
Movers, shakers and the rest
Singapore tops the Enabling Trade Index (ETI) for the fifth time. Its domestic market is rated as one of the world’s most open, with 99.7% of goods entering duty free. The report highlights its border processes as the best in the world – while failings in border administration are a stumbling block in other economies.
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The country’s transport services and overall socio-political operating environment, including highly efficient and trusted public institutions, also contribute to its overall trade leadership.
Europe and North America remain the highest performing regions on enabling trade, but have witnessed a slowdown since 2014. Most progress in Europe was made by emerging players: for instance, Lithuania moved up eight places to 29th and Serbia made up a 18 places to reach 64th.
Among the advanced economies, Switzerland – which landed just outside the top 10 – and the US provide the worst access to domestic and foreign markets, respectively.
Domestic market access and GDP
The most improved region overall was sub-Saharan Africa, which had made significant advances in terms of market access and information and communications technology adoption.
While the ASEAN members were singled out for being the most "open for business" in terms of market access, South Asia was highlighted as the most closed region in the world, having increased tariffs on imported products by nearly 1%, to 16.7%.
The report also says that high barriers to entry and prohibitive trade costs are still preventing millions of people around the world from benefiting from international trade. This is particularly true of rural communities, young people and women, and especially in larger emerging markets.
The top 10 countries for trade only account for 3% of the world population, while more than half live in countries ranked in the bottom half of the ETI. China as one of the most populous countries in the world is the most prominent example, ranking only 61st for trade.